The initial level cap system used in FFXI was very well balanced imo. There is nothing wrong with increasing the level cap but I feel it should be done on a play-by-play basis.
Jericho, I thumbs-up'd your initial post of keeping the level cap static. And yes - I also agree with the 80, 90 or even level 99 (but NEVER 100!) cap in general areas (zones which are part of the basic game mechanics). My contribution to this thread would be that expansions could absolutely come with further increases in level cap but these caps should only be viable in the expansion-content related areas. This is not a complex thing really and I can't see a problem with it story wise and as far as technology goes it should be easy enough to implement.
So in short. Put a 'normal-stage' level/rank cap, say 75 (for ol' times sake) in all major areas of the game. As more content gets released this cap can then be adjusted up or down depending on the content and it's target audience.
Now I hear someone saying "There will be issues with gear from higher level content! Players want to wear/show-off/brag their über ninja laz0r harness +3 that they got from this one awesome rank 99 instance! And they wanna do it whilst being AFK in Ul'dah!" Ok, fine. That feature is already in game. Just wear the item but it's true power is not active until the item is within it's content-origin zone.
Now. Here's a
picture of a kitten.